Revenue-based lending gives a Kerrville, TX business a lump sum now and collects a fixed share of its monthly revenue until an agreed total, the cap, is paid. A strong month pays more, a slow month less, so the payoff date moves with sales. A merchant cash advance works differently: it buys future card sales and is not a loan. Bellshire Business Funding takes the request to funding partners, and they decide.
A revenue-share deal followed month by month with invented sales, compared with a merchant cash advance and a fixed-payment loan, plus the contract terms that change the real cost.
How revenue-based lending works when sales go up and down
Three terms define the deal: the amount advanced, the cap (the total the business pays back, written as a multiple of the advance) and the share of monthly revenue collected. Revenue can be read from bank deposits, so the payment is worked out after each month closes. Nothing about the total changes when sales swing; only the pace does.
Invented example: $40,000 advanced with a 1.3 cap, so $52,000 in all, collected at 9% of each month's revenue. With the invented sales below, the cap is reached in month 11, when the last payment is only the $1,510.00 still owed.
| Month | Revenue that month | Payment at 9% | Left to the cap |
|---|---|---|---|
| 1 | $61,000 | $5,490.00 | $46,510.00 |
| 2 | $47,000 | $4,230.00 | $42,280.00 |
| 3 | $72,000 | $6,480.00 | $35,800.00 |
| 4 | $38,000 | $3,420.00 | $32,380.00 |
| 5 | $55,000 | $4,950.00 | $27,430.00 |
| 6 | $66,000 | $5,940.00 | $21,490.00 |
| 7 | $58,000 | $5,220.00 | $16,270.00 |
| 8 | $43,000 | $3,870.00 | $12,400.00 |
| 9 | $69,000 | $6,210.00 | $6,190.00 |
| 10 | $52,000 | $4,680.00 | $1,510.00 |
| 11 | $64,000 | $1,510.00 (the rest of the cap) | $0.00 |
Revenue-based products are not all drafted the same way. Some are loans that state a cap; others are written as a sale of future revenue, which places them nearer to a merchant cash advance. Page one of the agreement names the structure, and that name decides which rules and protections apply.
Revenue-based lending vs a merchant cash advance
A merchant cash advance is a purchase of future receivables: the provider pays a sum now and collects an agreed amount from card sales or bank deposits, as often as each business day. It is not a loan. A revenue-based loan is debt, collected monthly as a share of revenue.
| Feature | Revenue-based lending | Merchant cash advance |
|---|---|---|
| What it is | A loan with a cap, or a revenue purchase: the agreement says | A purchase of future receivables, not a loan |
| How often it collects | Monthly, after revenue is counted | Daily or weekly, from card sales or deposits |
| What sets the payment | A share of total monthly revenue | A holdback percentage or a fixed debit |
| How the cost is stated | A cap, such as 1.3 times the advance | A factor: each dollar advanced buys more than a dollar of receipts |
| A slow stretch | The payment shrinks with revenue | Depends on the contract and its reconciliation clause |
For a business that bills by invoice and gets paid by check or bank transfer, the monthly revenue share can be the closer match, because card sales are only part of the picture. Read how each contract defines revenue before comparing them.
Costs to compare before accepting
The cap fixes the cost in dollars, $12,000 in the invented deal, but not the cost over time. Because the total is the same however soon it is paid off, strong sales make the money more expensive per month it is outstanding.
Run the same deal on two invented sales paths. With sales 50% above the base case, the cap is reached in 7 months, about $1,714 of cost for each month the money was used. With sales 35% below it, payoff takes 16 months, about $750 a month. Same $12,000, very different price for the time.
- What counts as revenue: all deposits, or only sales (a transfer between the owner's accounts should not count).
- A minimum monthly payment that applies even when revenue falls.
- An origination fee taken out of the advance, so less than the full amount arrives.
- Whether paying the cap off early earns any discount, or the full cap is owed regardless.
- A reconciliation or true-up clause, and how often it adjusts the payment.
- Reporting duties: bank access, monthly statements, and what happens if a statement is late.
When a fixed-payment loan is the better fit
A fixed-payment loan is the better fit when revenue is steady enough to carry the same payment each month, or when the money buys something that lasts. On the same $40,000, an 18-month working capital loan at an invented 12% annual rate means 18 payments of $2,439.28 and $3,907.04 of interest, which is $8,092.96 less than the cap cost in this example.
For a short gap that closes when a customer pays, a business line of credit can be cheaper still, because interest runs only while the balance is drawn. Revenue sharing earns its place when sales truly swing and a fixed payment in a weak month would strain the account.
The Kerr County, TX self-employment share is 18.0% in the 2020-2024 ACS, with a 2.1-point margin of error. For Texas, the ACS series also reports 10.5% self-employment, with a 0.1-point margin of error.
The request form is a starting point, not a credit application, and a funding partner may check credit in its own review. The other posts are on the Bellshire blog.
By Bellshire Business Funding · Updated
